What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-02-13 compared with 2025-11-10 · 137 added, 47 removed, 100 unchanged (65% of the section changed)

44 unchanged sentences

The following discussion

reflects the Company’s revenues and expenses for the three-month periods ended September 30, 2025 and 2024, as reported in our financial

statements included in Item 1.

Comparison of three months ended September

30, 2025 versus three months ended September 30, 2024

reflects the Company’s revenues and expenses for the three and six month periods ended December 31, 2025 and 2024, as reported in

our financial statements included in Item 1.

Comparison of three months ended December 31,

2025 versus three months ended December 31, 2024

Revenues - Revenues

from contracts with customers for the three months ended September 30, 2025 were $6,650,258 compared to $590,236 for the three months

ended September 30, 2024.

from contracts with customers for the three months ended December 31, 2025 were $4,645,517 compared to $1,071,581 for the three months

ended December 31, 2024.

Such increase in our revenues was primarily due to the rapid expansion

2 unchanged sentences

Cost of Goods Sold

- Cost of goods sold for the three months ended September 30, 2025 were $5,073,006 compared to $497,389 for the three months ended September

- Cost of goods sold for the three months ended December 31, 2025 were $3,872,995 compared to $747,670 for the three months ended December

The cost of goods sold in both periods reflected the cost of procuring and assembling the component parts of the energy storage

systems that were sold in each fiscal year and resulted in gross profits on such sales of approximately 17% and 30%, respectively, with

the increase due to manufacturing efficiencies and the correction of a prior period entry.

the decrease largely being due to the reversal in December 2024 of a prior year reserve for obsolescence on component parts of our NV-14Ks

General and Administrative

Expense - General and administrative expenses for the three months ended September 30, 2025 were $2,374,668 compared to $1,050,119

for the three months ended September 30, 2024.

Expense - General and administrative expenses for the three months ended December 31, 2025 were $5,081,966 compared to $1,228,517

for the three months ended December 31, 2024.

Such increase was mainly due to our engagement of a new chief executive officer, who was

engaged at an annual salary of $350,000 and also received a 4 year amortizing equity award of $2,854,000, as well as the hiring of several

other employees since April 2024.

The addition of these personnel has resulted in a higher level of both cash compensation expense and

other associated expenses, such as marketing and travel, as well as non-cash stock compensation expenses related to the Company’s

equity incentive programs.

engaged at an annual salary of $350,000 and also received a 4 year amortizing equity award of $2,854,000 and other equity incentives,

as well as the hiring of several other employees since April 2024.

The addition of these personnel has resulted in a higher level of both

cash compensation expense and other associated expenses, such as marketing and travel, as well as non-cash stock compensation expenses

related to the Company’s equity incentive programs.

Research and Development

Expense - Research and development expenses for the three months ended September 30, 2025 were $56,912 compared to $8,617 for the

three months ended September 30, 2024.

Expense - Research and development expenses for the three months ended December 31, 2025 were $58,795 compared to $42,324 for the

three months ended December 31, 2024.

Such fluctuation was largely due to timing differences in the level of the Company’s recent

product development efforts.

Depreciation and Amortization

Expense - Depreciation and amortization expenses for the three months ended December 31, 2025 were $108,283 compared to zero for the

three months ended December 31, 2024.

Such fluctuation was attributable to our closing of an acquisition of intangible and tangible assets

from Neubau Energy Inc., which closed in October 2025.

Other Income and Expense

- Interest expense for the three months ended September 30, 2025 was $389,134 compared to zero for the three months ended September 30,

2024, reflecting interest attributable to borrowings made under our lender credit arrangements obtained since September 30, 2024.

income for the three months ended September 30, 2025 was $140 compared to $1,395 for the three months ended September 30, 2024.

This decrease

was due to our lower level of investable cash in the three months ended September 30, 2025.

– Loss on debt exchanges for the three months ended December 31, 2025 was $858,002 compared to zero for the three months ended December

31, 2024, and resulted from two exchange agreements entered into with one of our lenders in October and November 2025.

Interest expense

for the three months ended December 31, 2025 was $204,700 compared to $24,546 for the three months ended December 31, 2024, reflecting

interest attributable to a higher level of borrowings made under our lender credit arrangements obtained since September 30, 2024.

income for the three months ended December 31, 2025 was $425 compared to $339 for the three months ended December 31, 2024, due to a slightly

higher average level of investable cash in the three months ended December 31, 2025.

Net Loss - Net loss

for the three months ended September 30, 2025 was $1,243,322 compared to $964,494 for the three months ended September 30, 2024, representing

for the three months ended December 31, 2025 was $5,538,799 compared to $971,137 for the three months ended December 31, 2024, representing

the aggregate of the various revenue and expense categories indicated above.

1 unchanged sentence

these net losses due to the uncertainty of its ultimate realization.

Comparison of six months ended December 31,

2025 versus six months ended December 31, 2024

Revenues - Revenues

from contracts with customers for the six months ended December 31, 2025 were $11,295,775 compared to $1,661,817 for the six months ended

December 31, 2024.

Such increase in our revenues was primarily due to the rapid expansion of various

new sales channels outside of our traditional focus on the local installer market in the Southern California area while maintaining essentially

the same price points since the engagement of our new chief executive officer in April 2024 .

Cost of Goods Sold

- Cost of goods sold for the six months ended December 31, 2025 were $8,946,001 compared to $1,245,059 for the six months ended December

The cost of goods sold in both periods reflected the cost of procuring and assembling the component parts of the energy storage

systems that were sold in each fiscal year and resulted in gross profits on such sales of approximately 21% and 25%, respectively, with

the decrease partially being due to the reversal in December 2024 of a prior year reserve for obsolescence on component parts of our NV-14Ks

General and Administrative

Expense - General and administrative expenses for the six months ended December 31, 2025 were $7,456,634 compared to $2,278,636 for

the six months ended December 31, 2024.

Such increase was mainly due to our engagement of a new chief executive officer, who was engaged

at an annual salary of $350,000 and also received a 4 year amortizing equity award of $2,854,000 and other equity incentives, as well

as the hiring of several other employees since April 2024.

The addition of these personnel has resulted in a higher level of both cash

compensation expense and other associated expenses, such as marketing and travel, as well as non-cash stock compensation expenses related

to the Company’s equity incentive programs.

Research and Development

Expense - Research and development expenses for the six months ended December 31, 2025 were $115,707 compared to $50,941 for the six

months ended December 31, 2024.

Such fluctuation was largely due to timing differences in the level of the Company’s recent product

development efforts.

Depreciation and Amortization

Expense - Depreciation and amortization expenses for the six months ended December 31, 2025 were $108,283 compared to zero for the

six months ended December 31, 2024.

Such fluctuation was attributable to our closing of an acquisition of intangible and tangible assets

from Neubau Energy Inc., which closed in October 2025.

Other Income and Expense

- Loss on debt exchange for the six months ended December 31, 2025 was $858,002 compared to zero for the six months ended December 31,

2024, and resulted from two exchange agreements entered into with one of our lenders in October and November 2025.

Interest expense for

the six months ended December 31, 2025 was $593,834 compared to $24,546 for the six months ended December 31, 2024, reflecting interest

attributable to a higher level of borrowings made under our lender credit arrangements obtained since September 30, 2024.

Interest income

for the six months ended December 31, 2025 was $565 compared to $1,734 for the six months ended December 31, 2024 due to a lower average

level of investable cash in the six months ended December 31, 2025.

Net Loss - Net loss

for the six months ended December 31, 2025 was $6,782,121 compared to $1,935,631 for the six months ended December 31, 2024, representing

the aggregate of the various revenue and expense categories indicated above.

The Company has not recognized any income tax benefit for

these net losses due to the uncertainty of its ultimate realization.

Liquidity and Capital Resources

Operating activities.

Net cash used in operating activities in the three months ended September 30, 2025 was $2,494,069 compared to $593,031 in the three months

ended September 30, 2024.

Net cash used in operating activities in the six months ended December 31, 2025 was $4,578,069 compared to $1,451,330 in the six months

ended December 31, 2024.

This increase was largely due to the current period increase in our comparative net loss, primarily resulting

1 unchanged sentence

in our net working capital needs, including recent stockpiling and prepayment of inventory, on a comparative basis.

Investing activities.

Net cash used in investing activities in the six months ended December 31, 2025 was $500,000, compared to zero in the six months ended

December 31, 2024.

Such fluctuation was entirely due to the cash portion of our purchase price of an acquisition of intangible and tangible

assets from Neubau Energy Inc., which closed in October 2025.

Financing activities.

Net cash provided by financing activities in the three months ended September 30, 2025 was $2,589,052, compared to zero in the three months

ended September 30, 2024.

Net cash provided by financing activities in the six months ended December 31, 2025 was $4,525,667, compared to $793,649 in the six months

ended December 31, 2024.

Beginning in November 2024, we have made short-term borrowings from two private lenders, primarily to finance

inventory purchases.

In the three months ended September 30, 2025 we made borrowings from these lenders in the amount of $4,199,549 and

repayments in the amount of $2,660,497.

Additionally, we received a cash deposit from an investor for an advance subscription under our

planned new private equity offering.

As of September 30, 2025,

we had a cash balance of approximately $0.9 million and net working capital of approximately $2.7 million.

Currently, we are not generating

a break-even level of net operating cash flow from our net sales.

However, we anticipate that demand for our products will ultimately

increase over time and that, with our current credit sources, we will have sufficient cash to operate for at least the next 12 months.

In the six months ended December 31, 2025, we made borrowings from these lenders in the total amount of $6,698,725

and repayments in the amount of $5,173,058.

In December 2025, we also partially closed a private equity offering pursuant to agreements

entered into in November 2025 with an accredited investor group under which we issued a total of 1,200,000 shares of our common stock

to the investor group at an offering price of $2.50 per share resulting in gross proceeds of $3,000,000.

In the six months ended December

31, 2024, we made borrowings from these lenders in the total amount of $889,732 and repayments in the amount of $256,483.

2024, we also received proceeds from the exercise of warrants issued in our August 2022 public offering in the amount of $160,400.

As of December 31, 2025, we

had a cash balance of approximately $0.2 million and net working capital of approximately $4.1 million, an increase of approximately $1.4

million in the recent quarter.

Currently, we are not generating a break-even level of net operating cash flow from our net sales.

we anticipate that demand for our products will ultimately increase over time and that, with our current credit sources and the proceeds

of our registered direct offering in January 2026 (see “Other Developments ”) , we will have sufficient cash to operate

for at least the next 12 months.

Other Developments

In January 2026, we closed

a securities purchase agreement with a group of purchasers, pursuant to which we sold to the purchasers, in a registered direct offering,

a total of 2,100,841 shares of our common stock at an offering price of $4.76 per share.

The gross proceeds to the Company from the registered

direct offering were $10,000,000 and the net proceeds were $9,350,000, after deducting offering expenses payable by the Company.

to use the net proceeds from this offering for working capital and general corporate purposes.

In January 2026, we also executed

a series of joint venture agreements with the U.S.

affiliates of a foreign entity for the formation of a new domestic limited liability

company to jointly own and operate a planned battery manufacturing facility in the southeastern United States.

Pursuant to these agreements,

the Company has a 60% ownership interest in the joint venture company, and the two U.S.

affiliates of the foreign entity each have a 20%

ownership interest.

In January and February, we

closed the remainder of our November 2025 private equity offering, and issued a total of 4,000,000 shares of our common stock at an offering

price of $2.50 per share resulting in gross proceeds of $10,000,000.

We utilized $7,000,000 of those proceeds in the joint venture company

in order to satisfy our initial capital contribution, as required under the joint venture agreements, and the remainder for general corporate

Further, we are expected to

make additional capital contributions to the joint venture company through June 30, 2027 in total amounts of up to $33,000,000, pursuant

to the joint venture agreements.

The next scheduled capital contribution we will be required to make will be in the amount of $8.0 million

on or before April 30, 2026.

We presently anticipate funding those additional capital contributions from the proceeds of one or more private

offerings of our common stock, subject to market conditions.

However, there can be no assurance that we will be successful in raising

sufficient proceeds from such private offerings in order to fully satisfy our obligations for the additional capital contributions to

the joint venture company.

To the extent that we may be unable to raise sufficient proceeds in order to fully satisfy our obligations

for the additional capital contributions to the joint venture company, the parent company of the same foreign entity will be permitted

to bring in one of more new members of the joint venture company to fund such additional capital contributions which would dilute our

present 60% majority ownership of the joint venture company.

We continue to monitor current

6 unchanged sentences

Beginning in April 2025, the Trump Administration implemented a significant

increase in tariff rates on all goods imported from China, although it was temporarily suspended for 90 days in April 2025 and the suspension

has been extended to November 2025, subject to judicial review.

increase in tariff rates on all goods imported from China, although it was temporarily suspended for 90 days in April 2025 and the tariff

rate was lowered in November 2025, subject to judicial review.

Prior to the tariff escalation in April 2025, we had anticipated the likelihood

of facing such a tariff increase and began stockpiling our inventory of these two components.

As a result, we do not anticipate having

to purchase a significant level of such components at post-tariff prices for the next several months.

In the event, however, that

such a mutual trade agreement is not reached between the parties within the next several months and we find it necessary to begin purchasing

a significant level of our inventory components from China at post-tariff prices, we would be faced with a decision as to whether we should

attempt to pass along such tariff increases to our customers through higher prices for our products or absorbing them internally, or some

combination of those two alternatives.

Either circumstance would likely materially adversely affect our sales and/or our profitability.

Off-Balance Sheet Arrangements

14 unchanged sentences

2025, for a further description of our critical accounting policies and estimates.

None of those policies are deemed to be critical accounting

policies nor critical accounting estimates.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis